Negotiating Client Budget Reductions

Yes, economic times are tough. Yes, some industries are particularly hard hit. Yes, some number of clients are going to push back on rates, crying that they are in budget difficulties. And, yes, it's true: many are and might not have more money to spend.

But, as I've written before, no, your first reaction should not be to drop your prices in a bid to make clients happy. There are a few reasons:

• Some clients may be desperate, but there will also be many interested in knowing how much they can save by crying poor.
• Anyone who wrote for technology publications in the late 1990s knows that when the dot com bubble burst, specialized magazines were going out of business right and left, and the remaining ones reduced their rates. (To be fair, the rates were related to high demand for writers and their relative scarcity to the work load.) If a client says, "We'll pay less until times are better," realize that the probability that times will get better enough for them to raise rates is about zero.
• Clients often talk, and once you're known for writing for those who pay less, the ones who pay more may want to revisit your rates.
• The more you give in on pricing, the more you have to work to make your living. Eventually your life is there to support your work, not the other way around.

To reduce your rates is to devalue what you are doing. There may be times it is necessary, but that is probably a rare occasion. More often you can try renegotiating to balance out the value you are giving up. Here are some approaches that can work:

1. Reduce what you offer -- Look to see where you can scale back what you provide to the client. Mind you, this is something you do out in the open so they understand that they are getting less because they are paying less. Maybe you don't search for art, or write something shorter, or provide fewer options.
2. Better payment terms -- If budgets are smaller, it might be that the client can pay faster or pay for a bank transfer instead of your waiting for a check to clear. Be careful, as some clients will promise anything knowing that the accounting department will work on its usually time frame.
3. Get regular work -- It takes a certain amount of time to find work. Get to some reasonable estimate of how long that is, and you can use your bottom line hourly figure to determine how much that time is worth to you. Discount an assignment by less than that, and you're actually ahead because you open more time for assignments and other marketing. So trade off a somewhat lower fee for guaranteed work.
4. Improve other terms -- There may be other conditions that, if changed, either improve cash flow, open time, or provide some other benefit whose financial value you can calculate. It may be that having more time to work on an assignment lets you manage your schedule more effectively. If you're doing work that requires outsourcing sections, it could be that you can have the client directly pay the other people (though you do face the potential risk of their making deals independent of you, which may or may not be a problem, depending on your business model). It might be that you can get money forwarded for expenses, rather than receiving payment after the fact.

As with all forms of negotiation, creative problem solving can take you a long way and even turn what could have been an income drop into a net gain.